Destroying HMOs

April 01, 1994

To hear lobbyists for physician groups describe it, you would think the "any willing provider" bill on the state Senate floor simply rights a wrong. They say it merely gives every enrollee of a health maintenance organization the option to choose his or her own doctor. But that's deceptive. The bill would cripple HMOs in this state and funnel huge amounts of money to non-HMO physicians.

Even worse, the money going to non-HMO health-care providers would come directly out of the pockets of patients and their employers. Roughly $200 million would wind up in the hands of non-HMO physicians. Here's how it would work:

Under the proposal, a person enrolled in an HMO would not have to stay within the HMO network but could go to any doctor ("any willing provider"). The HMO would be forced to reimburse the doctor 75 percent of what the HMO usually pays for that procedure; the patient must pick up the rest. If the doctor's bill is $1,000, the HMO would fork over 75 percent of its normal network fee of $700 -- or a total of $525. The patient then would pay the difference -- $475. Compare that to the out-of-pocket expense for an HMO enrollee who is treated by a doctor within the network: zero.

The idea is to encourage patients to go to specialists outside the HMO system. Maryland has a glut of them. That's one of the main reasons for the intense lobbying on behalf of this bill.

It amounts to a giant income transfer from consumers and businesses to non-HMO doctors. In the process, the cost-containment underpinnings of HMOs would be destroyed. No longer could HMOs depend on their own doctors to act as "gatekeepers" in directing patients to specialists while also keeping an eye on cost controls. Nor could quality controls be enforced. Nor could HMOs negotiate discounted rates from doctors (there would be no economic incentive for the MDs). The concept of "managed care" would be shattered.

Isn't this pointing Maryland in the opposite direction from what's happening in Washington? Isn't this the reverse of what was achieved by the legislature last year in trying to contain costs?

Absolutely. Maryland's health secretary opposes this measure. So does the House speaker and the Senate president. So do leaders of organized labor and business. So does the chairman of the state's health-care cost-containment commission. And so should most members of the Senate and House.

If lawmakers want an impartial analysis, they can turn to the Federal Trade Commission's staff review of this kind of legislation. "In summary," the FTC document notes, "we believe that 'any willing provider' requirements may inhibit competition. . . in turn raising prices to consumers and unnecessarily restricting consumer choice without providing any substantial public benefits."

Or as Gov. Lawton Chiles of Florida put it in describing his own state's debate over the "any willing provider" concept, "we ought to be skeptical of this wolf in sheep's clothing."